The impact of foreign parent control mechanisms upon measurements of performance in IJVs in South Korea

Abstract

Purpose

The purpose of this paper is to generate an observable relationship between five control mechanisms used by parent firms to direct international joint ventures (IJVs) with three distinct performance measurements. By observing relationships with different performance measures it serves to enhance the debate on IJV creation and control functions.

Design/methodology/approach

This paper looks at IJVs and analyzes the application of control mechanisms through a survey of IJVs in South Korea, then a further review of the different performance measurements is provided to expound upon the increasing reasons of IJV creation.

Findings

The paper determines different impacts upon performance measures through the use of either personnel or policy measures. Parents' use of personnel shows a direct relationship with satisfaction levels of IJV performance, while policy measures show significant relationships to both financial and growth measurements. The paper finds that through the use of multiple performance measurements there is a greater understanding of the implications of control of different aspects of an IJV.

Research limitations/implications

The paper is concentrated solely on IJVs in South Korea; and further, measurements based on perception are consistently subject to accuracy concerns in statistical analysis.

Practical implications

IJVs are set up with different goals. Utilizing control mechanisms that enhance the performance goal of a parent can provide support during the creation and negotiation process.

Originality/value

The value provided by this paper is the critical analysis of control mechanisms on more than one performance measurement and a quantifiable statistical analysis that shows significant impact of certain mechanisms.

Citation

Ghauri, P.N., Cave, A.H. and Il Park, B. (2013), "The impact of foreign parent control mechanisms upon measurements of performance in IJVs in South Korea", Critical Perspectives on International Business, Vol. 9 No. 3, pp. 251-270. https://doi.org/10.1108/17422041311330413